Spokane settles suit over River Park Square

Firm to give city $4.25 million

Published 10:00 pm, Wednesday, April 27, 2005

SPOKANE -- City officials moved to put a long-running civic nightmare behind them yesterday, approving settlement of the last lawsuit filed over the River Park Square mall.

The Spokane City Council voted 6-1 to accept a $4.25 million payment from Perkins Coie LLP of Seattle, the city's bond counsel in the project. The settlement means a trial on the city's federal legal-malpractice lawsuit, which had been under way in Richland, will be dismissed.

That ends nearly all litigation over the downtown shopping mall, a project that has consumed local government for five years and destroyed the political careers of three mayors.

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"There's always the chance of ringing the bell, but there's also the possibility of getting nothing," City Attorney Mike Connelly said in recommending the settlement.

Continuing the trial carried the risk of no money if the city failed to convince jurors that Perkins Coie committed legal malpractice. Some former elected officials might have testified against the city, he said.

Robert Giles, managing partner of Perkins Coie, issued a written statement Tuesday saying, "This has been a long and costly process for all involved. I'm glad we were able to agree on a resolution."

The city sued Perkins Coie and lawyer Roy Koegen, contending that bad legal advice from them led to the city's problems with the mall parking garage, the focus of much of the litigation.

The deal means the city will have paid $32.6 million over the past year to settle fraud claims by bond investors while collecting $11.2 million in settlements from former co-defendants.

River Park Square, which opened in 1999, is a $110 million shopping mall and entertainment complex built with public and private money to help revitalize the downtown core.

Conflict over the complicated deal pitted the wealthy Cowles family, which owns the mall, against critics who said it was an inappropriate use of public funds intended for urban renewal.

Numerous lawsuits were filed. City officials estimate that $20 million was spent on attorneys fees over the past five years.

A year ago, city officials took steps to resolve the case by buying back the original bonds for about $32.6 million. The city also secured repayment of a $23 million federal loan for the project with a letter of credit from the developer. The city will sell bonds to pay off the remaining debt.

Standard & Poor's recently raised the city's bond rating from BBB to AA-, a five-step increase which already has saved the city $300,000 in borrowing costs, said Gavin Cooley, the city's chief financial officer.

The parking garage, also built with public and private money, was supposed to be backed by city parking-meter revenues. When those revenues fell short, the council refused to spend the meter money, resulting in lawsuits in state court. Meanwhile, investors who bought about $31 million in garage construction bonds sued in federal court, alleging fraud and misrepresentation.